Unclaimed Salaries and Bonuses: How Should We Handle Recovery and Deposits?

Dear Seniors & Colleagues,

I would like to take your view on the situation below:

Unclaimed Salaries and Bonuses

Unclaimed salaries and bonuses are with us in the company for employees who have either absconded or left the job without a notice period. We held their salaries for one month initially, and in their full and final settlement, recoveries occurred, possibly due to wage deductions for bulk attendance or notice period.

The recoveries exceed the wages to be paid, and we have notified these employees to repay us this amount, but they have not responded, and the funds remain unclaimed.

Please advise if we can recover this amount from the unclaimed salaries or if we should deposit it into the labor welfare fund.

Please advise.

Regards,
Ranjeet

You can set off the recovery against the unclaimed wages and dues of the employee. However, a proper process must be followed, and full documentation maintained.

To the best of my knowledge, there is no specific process defined in any of the acts or rules. You need to do the following:

1. Send out letters by registered ad to each employee asking them to come and complete their full and final settlement. Specify in the letter that they need to pay you for the notice period not served. Keep ad copies from the post in the file (we generally recommend sticking it on the office copy of the letter).

2. Also specify that if they do not get in touch with you in 15 days, you will adjust the notice pay against the outstanding wages and other dues. (Note: you cannot set it off against PF).

3. After 15 days, you can put up a memo to your HR head or CEO asking to approve appropriation of the outstanding wages against notice pay. Accounts and HR must make necessary entries against these employees in their records.

4. You may send a notice to the former employees informing them of the balance due from them after adjustment and letting them know that you plan to initiate legal action against them. (You don't actually need to initiate it, but it helps to write that you will).

5. In case there is any money left to be paid to an individual absconding employee after setting off notice pay, you need to intimate them of the same. If they do not come to collect it, you may deposit it in the labor welfare fund at the end of the 3 years mandatory waiting period.

Regards,